A New Time For Mexico?

The PRI is celebrating victory in yesterday's election. I wonder if Mexico will really change. Here is something I wrote about the Mexican state and politics in 1992, twenty years ago almost to the day. 

“The analogies sometimes drawn between recent political changes in Mexico and Eastern Europe apply equally well to the often disastrous consequences of state leadership ['rectoría del estado'] in large areas of production of services. Public ownership and pervasive state intervention are now under the spotlight of policy reform. By most economic and social standards of performance, state producer monopolies have proved poor substitutes for competition, enterprise autonomy and private ownership.

There comes a point beyond which traditional bureaucratic modes of patronage and cronyism become incompatible with the modernization and rational administration of public services. This is especially evident in the absence of a real structural separation between the regulators and the producers of state-sector goods and services. Public ownership conflates these functions in a network of relatively autonomous state-centred interest groups which may be fluid and in conflict with one another…

Similar criticisms of the existing model of state leadership in Mexico were quietly expressed by the more radical young technocrats of the ruling Partido Revolucionario Institucional (PRI) during the 1982-8 'sexenio'. By 1988 it seemed they would safely secure a safe mandate to attempt sweeping reforms from within, with a modernizing Mexican Gorbachev [Carlos Salinas] at the helm. But, even before the presidential elections of that year, aspects of the restructuring of the state sector met with considerable opposition from old-guard 'políticos', and from the 'técnicos' and 'especialistas', sections of the bureaucracy which dominate public service and utility agencies.

Ultimately, as in Eastern Europe, state power brokers have proved Janus-faced players in the retreat of the state. They themselves have been responsible for interpreting and implementing reform initiatives intended to undermine the institutions where they hold vested interests. It is that much less surprising, therefore, that they have sought to bend emerging rules of the game to their own advantage.

In this context, various so-called nationalist and neoliberal projects have been employed alternately and simultaneously by public and private-sector players whose underlying motives are individualist and parochial. Factional hijacking of the declared ideal ends of policy before and during the transition to a new regulatory regime can be achieved informally within the formal legal-bureaucratic structures of the state...

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… It is not surprising that as popular demands for political pluralism swell to the surface in conditions of economic crisis they focus on changing the visible face of the power structure, that is the PRI in Mexico, or the Communist Party in the socialist countries. Ironically, the political project of leading PRI technocrats may already be far more radical, in economic terms, than the platform of the main opposition [the PRD opposed economic liberalization and privatization]. There is a sense in which the state has begun, under force of circumstances, to turn in on itself.

Political democracy improves accountability, even in telecommunications. Yet it can also unleash strong forces against any substantive economic reform or the use of markets that appear to threaten the benefactor state. The danger is, however, that old-style vehicles of pervasive intervention bring a repeat of the abuses and inefficiency of monopoly power, and a continuing downward spiral of fragmentation among competing state empires. Political and consumer groups have been slow to take the initiative in negotiating the future structure of competitive markets and the transition to new state-regulatory regimes embodying rules, obligations and incentives. For as long as this reluctance persists, the political debate will continue to be dominated by a simple opposition between public or private ownership of the means of production...

Solutions will not simply lie with privatization of state monopolies. Government rent-seeking could conceivably continue to play havoc after a change of ownership; conversely, a private monopoly is more likely to end up colluding with its regulator.”

My chapter ‘Hijacking the Public Interest: The Politics of Telecoms Policy in Mexico’ in a collection on Mexico’s transition to democracy.

Not bad. It sounds familiar. Twenty years later I am still pitching the same message.

I hope the PRI is not as consistent as me.

Although Mexico remains one of the larger economies in the world with very special opportunities for cross-border fertilization, since 1992 its political economy has improved less impressively than the political economies of Poland, the Czech Republic, not to mention the stupendous cross-fertilization of East Germany.

Even after the privatizations and 12 subsequent years of rule by the conservative party, PAN, large parts of the telecoms market are still monopolistic. A recent paper notes:

“a winner-takes-all approach severely penalizes both Mexican consumers and businesses. Moreover, successive administrations have kept regulation policy under tight control, allowing for a discretionary decision-making style that has discouraged competition… [The situation persists with] the connivance of political parties from all sides acting with a misguided sense of economic nationalism”.

Until 2004 I went often to Mexico. These words from 1984 still looked fresh then:

“Society as a whole functions through relationships of power, while individual rights are determined by levels of influence. With all intimacy shielded by masks of formality, Mexicans seem like actors, constantly adapting their roles to circumstances without risk of exposure or commitment. They also perform against an invisible background of latent violence that discourages explosions of temper or frustration; since the consequences of a test of wills can be bloody, confrontation is avoided and conciliation becomes second nature. The poet Andres Henestrosa [said] ‘we are always seeking concord when we discuss -- you’re half right, I’m half right.’ Even in the madness of Mexico City’s traffic, horns are rarely blown and insults only occasionally exchanged because many drivers still carry weapons in their glove compartments. In politics, this attitude is still clearer: fear of another revolution keeps the negotiating spirit alive.”

So wrote the legendary former Financial Times journalist Alan Riding.

Violence, violence, violence.

Now in a recent New York Times article, Riding says violence is not the central question:

“A more central question is whether a “new” PRI will dare confront the near monopolies — in energy, telecommunications, finance, cement, food and television — that support its return to power and have long profited from the noncompetitive marketplace. Mr. Peña Nieto’s best suggestion so far is to open up the government-owned oil monopoly, Pemex, to some private investment, but that battle lies ahead. So can the PRI change its spots? Many Mexicans are deeply skeptical… Mr. Peña Nieto will try to please everyone and will disappoint many. And if he governs only for the PRI’s old pals, he can expect to hear from the Mexican street…”

A brave bold policy revolution need not be bloody.This time, will it be “a new time for Mexico”?

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